Big Trouble From Big China

[April 30th, 2008]

The cost of food is expected to rise 4 to 5 percent in 2008, as farmers in Oregon and elsewhere pass along higher prices on wheat, corn and other commodities to restaurants, grocers and consumers.

So far, part of the blame for the sticker shock has fallen on Big Oil for pushing up the price of fuel, bumping up farmers’ production and transportation costs. Weather and higher demand worldwide have also played a role.

The bottom line? The price of your next trip down Fred Meyer’s aisles probably will be more expensive than the last.

But now there’s a new group of people to blame, and their identity may shock you: They’re world-class athletes, and like you they depend on clean air. The difference is, they’re about to compete in the Olympics this August in Beijing, where blue skies are about as rare as a Nadia Comaneci-style perfect 10.

As if the upcoming 2008 Summer Olympics hadn’t caught enough flak for China’s importation of oil from Sudan (see “Holiday Win,” WW, Nov. 28, 2007) or China’s suppression of Tibet (“Tibet: The Other Protest,” WW, March 26, 2008), now the Games’ need for healthy air in heavily polluted Beijing is forcing farmers in Oregon—and elsewhere across the globe—to pay more for their herbicides.

And that increased herbicide cost is just one more factor that adds up to higher prices on bread, beets and berries right here at home.

“At the beginning point of the food chain, we’re constantly reminded of how interconnected we are in this global system,” says Tammy Dennee, executive director of the Oregon Wheat Growers League.

Here’s how the connection works:

In advance of the Summer Olympics’ Aug. 8 start, Chinese officials have taken steps to clear the airshed around the polluted capital, The New York Times reported April 15.

That move means factories in China manufacturing glyphosate, the active ingredient in popular weed killers, must sharply reduce if not halt production, according to a spokesman for Monsanto. Since the factories depend on trucks and other polluting activities, they’re considered contributors to Beijing’s poor air quality.

Monsanto invented and patented the most popular glyphosate-based herbicide, sold under the brand name Roundup. And although it does not make Roundup in China (and says its American manufacturers are clean), its generic competitors do. And that’s where the equation gets convoluted, according to Monsanto spokesman Brad Mitchell.

A decreased supply of any kind of glyphosate, coupled with an increase in demand for products like wheat (which sometimes require the application of herbicides), translates to higher prices on both the generic brands and Roundup, Mitchell says.

Mitchell could not quantify the exact price increase on Roundup due to the Chinese Olympics, since the price of gas and other factors also control the cost of the herbicide. But he characterized the jump as “significant.”

In Forest Grove, farmer Tom Duyck can quantify the difference.

Duyck says he paid $15 a gallon for Roundup last year compared with $30 a gallon this year. Since he uses 30 to 40 gallons of the herbicide every spring, that jump translates to an increase of $450 to $750 a year.

That’s modest compared with the spike in fuel prices putting pressure on Duyck’s bottom line. But at his 200-acre family farm, where he grows everything from winter wheat to table beets, the price crunch on the 56-year-old farmer is real no matter the cause or scope.

There is a bright spot because alongside the increase in prices on supplies, prices on commodities have also risen. Consumers are paying more, but he’s also earning more for now.

“It’s probably a two-edged sword,” Duyck says.

In Eastern Oregon, where water is scarcer, farmers also use modest amounts of Roundup to kill weeds and preserve moisture for crops.

Jeff Newtson, a 37-year-old wheat farmer near Hermiston, says he paid about $18 a gallon for Roundup last year and $36.50 a gallon this spring. At the same time, the prices on fuel and fertilizer have doubled, he says.

“All of these factors…have created the reality you and I see at the grocery store,” Dennee says.